An Innovative Way to Combat Card Not Present Credit Card Fraud

This past year, French company Oberthur Technologies developed a new credit card called MotionCode that could significantly reduce card not present (CNP) fraud, which occurs during virtual point-of-sale (POS) transactions, such as online shopping. It would achieve this using dynamic CVV numbers[1] that would appear on a lithium battery-powered electronic display on the back of the credit card and would change every hour. This could give fraudsters a very narrow window of opportunity to use the credit card information before the CVV number would be useless. And since most fraud occurs a few hours or days after the credit information is stolen, this would certainly make an impact on reducing CNP fraud.

The development of this new credit card technology is well-timed. Some articles have speculated that Europe and North America’s widespread migration to EMV[2] has led to increased CNP fraud. This is because EMV has made it very difficult to perform point-of-sale transactions with counterfeit credit cards so fraudsters are moving their work to online shopping sites.[3] Most solutions to combat growing CNP fraud have been based on multi-factor identity authentication, requiring extra steps in the online transaction process, sometimes on the cardholders’ part, to verify their identity. However, the innovative MotionCode technology offers a much simpler and more user-friendly way to combat CNP fraud. It is used to make payments the same way as a regular credit card, but with security built into its design.

Questions remain as to what costs, if any a vendor might incur for allowing customers to use the new MotionCode (or similar) technologies.

[1] Card Verification Value (the three-digit number on the back to credit cards)

[2] Europay, MasterCard and Visa pin and chip credit cards

[3] “Card-Not-Present Fraud: A Primer on Trends and Authentication Processes.” Smart Card Alliance Payments Council. February 2014.